Lawley Surety Bonds

A: A bond is NOT insurance. Insurance is a 2-party obligation between the insured party and the insurance company. Insurance assumes risk determined by a “risk factor” or class of business. A surety bond, although issued often by a division of a large insurance company, is a three-party obligation between the Contractor, Surety company and Obligee (the entity requiring the bond such as the city or state) and is underwritten with zero risk factor and determined on an individual basis rather than a pool. Basically, the surety is “guaranteeing” that the contractor requesting the bond on behalf of the oblige will perform the job and pay all parties involved.

A: ALL Contractors can benefit from obtaining a bonding line. This shows the oblige or potential client that they have been thoroughly evaluated and have the ability to post a bond to protect the owners project. This often gives small contractors the advantage they need to compete against larger contractors.

A: The indemnity agreement is the legal document that fully discloses the Principal’s obligations in a surety relationship, which allows the Surety the right to recover any losses paid out on behalf of a Principal. Under the bond, the Principal is the primary responsible party and must agree to reimburse the Surety for any claims or expenses they incurred because the Principal has not lived up to their agreement.